UK: Inflation bounces back in September – UOB
|Lee Sue Ann, Economist at UOB Group, reviewed the latest release of UK inflation figures.
Key Quotes
“Inflation in the UK accelerated in September – CPI rose to 0.5% y/y from 0.2% y/y in August, a tad below expectations for a reading of 0.6% y/y. Transport costs, as well as restaurant and café prices, following the end of the ‘Eat Out to Help Out’ scheme, made the largest upward contributions (of 0.23ppts and 0.21ppts, respectively). This was partially offset by smaller price declines from furniture, household equipment and maintenance; games, toys and hobbies; and food and non-alcoholic beverages. Core inflation, which excludes volatile energy, food, alcohol and tobacco prices, also climbed to 1.3% y/y from 0.9% y/y in August, within expectations.”
“Despite the pickup in numbers, the headline inflation rate has been at less than half of the Bank of England (BOE)’s target of 2% since April. Since the onset of the COVID-19 pandemic, the BOE has expanded asset purchases and cut its benchmark interest rate twice to 0.10% from its previous level of 0.75%. In September, it kept monetary policy unchanged – its benchmark interest rate steady at the record-low of 0.10%, and its target for buying government and corporate bonds unchanged at GBP745bn.”
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